Extend-And-Pretend Has Grown The Multifamily Wall Of Maturities By 25%
Billions more dollars of multifamily loans are expected to mature next October than previously anticipated.
A new report from Gray Capital predicts that the rising wall of multifamily CMBS loan maturities over the next few years is expected to peak in October 2025 at $5.4B.
That prediction is much higher than the previous estimation for October 2025 of around $3B and is 25% higher than the previous peak maturity month of October 2023, the report states. This indicates that some of the 2023 loans were extended.
The report, using CoStar data on CMBS debt, compares today's estimated level of loan maturities through 2026 with where those estimates stood last year, and it shows several other "prominent spikes" where the dollar value has increased significantly. In addition to October 2025, expected maturities also rose notably in August 2026 and October 2026.
These new projected peaks for maturities come in large part because of the "extend and pretend" strategy of lenders pushing back maturity dates to provide more flexibility to borrowers amid a difficult capital markets environment, the report says. But they may not be extended further.
"Extend and pretend is coming to an end, and as lenders are increasingly incentivized to cease these practices, opportunities to invest in distressed properties will be elevated, but at the individual asset level rather than sector-wide," Gray Capital President and CEO Spencer Gray said in a release.
Borrowers have received some relief in recent months as the Federal Reserve cut rates by 50 basis points in September and another 25 points this month.
But Gray’s report says rates aren't expected to come down quickly enough to rescue all borrowers that face looming maturities and that many will continue to face pressure from elevated rates.
The borrowers most impacted will be those with bridge loans or construction loans that have already been extended, the report says.
There are positive signs for owners of multifamily assets, the report says. A slow construction environment and declining interest rates are putting upward pressure on rents and asset valuations.
Overall, debt maturing for all commercial real estate asset classes is expected to peak in 2026, a few quarters later than for multifamily, the Federal Reserve Bank of New York estimated in a research paper last month. Banks have $400B in near-term CRE loan maturities, according to the paper.
